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Collusive dominant-strategy truthfulness

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  • Chen, Jing
  • Micali, Silvio

Abstract

We show that collusion and wrong beliefs may cause a dramatic efficiency loss in the Vickrey mechanism for auctioning a single good in limited supply. We thus put forward a new mechanism guaranteeing efficiency in a very adversarial collusion model, where the players can partition themselves into arbitrarily many coalitions, exchange money with each other, and perfectly coordinate their actions. Our mechanism bypasses classic impossibility results (such as those of Green and Laffont, and of Schummer) by providing the players with a richer set of strategies, making it dominant for every coalition C to instruct each of its members to report truthfully not only his own valuation, but also his belonging to C. Our mechanism is coalitionally rational, which implies being individually rational for independent players.

Suggested Citation

  • Chen, Jing & Micali, Silvio, 2012. "Collusive dominant-strategy truthfulness," Journal of Economic Theory, Elsevier, vol. 147(3), pages 1300-1312.
    • Handle: RePEc:eee:jetheo:v:147:y:2012:i:3:p:1300-1312
    DOI: 10.1016/j.jet.2012.01.021
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    Citations

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    Cited by:

    1. Deckelbaum, Alan & Micali, Silvio, 2017. "Collusion, efficiency, and dominant strategies," Games and Economic Behavior, Elsevier, vol. 103(C), pages 83-93.
    2. Anil Chorppath & Tansu Alpcan & Holger Boche, 2015. "Adversarial Behavior in Network Games," Dynamic Games and Applications, Springer, vol. 5(1), pages 26-64, March.
    3. von Negenborn, Colin & Pollrich, Martin, 2020. "Sweet lemons: Mitigating collusion in organizations," Journal of Economic Theory, Elsevier, vol. 189(C).
    4. Mikhail Safronov, 2016. "A Coasian Approach to Efficient Mechanism Design," Cambridge Working Papers in Economics 1619, Faculty of Economics, University of Cambridge.
    5. Guo, Huiyi & Yannelis, Nicholas C., 2022. "Robust coalitional implementation," Games and Economic Behavior, Elsevier, vol. 132(C), pages 553-575.
    6. Hagen, Martin, 2023. "Collusion-proof mechanisms for multi-unit procurement," Games and Economic Behavior, Elsevier, vol. 138(C), pages 281-298.
    7. Jing Chen & Silvio Micali, 2016. "Leveraging Possibilistic Beliefs in Unrestricted Combinatorial Auctions," Games, MDPI, vol. 7(4), pages 1-19, October.
    8. Aryal, Gaurab & Gabrielli, Maria F., 2012. "Is Collusion Proof Auction Expensive? Estimates from Highway Procurements," MPRA Paper 57353, University Library of Munich, Germany, revised 19 Feb 2014.
    9. Olga Gorelkina, 2018. "Collusion via Information Sharing and Optimal Auctions," Working Papers 20182, University of Liverpool, Department of Economics.
    10. Hao Chung & Elaine Shi, 2021. "Foundations of Transaction Fee Mechanism Design," Papers 2111.03151, arXiv.org, revised Nov 2022.
    11. Gradwohl, Ronen & Reingold, Omer, 2014. "Fault tolerance in large games," Games and Economic Behavior, Elsevier, vol. 86(C), pages 438-457.
    12. Safronov, Mikhail, 2018. "Coalition-proof full efficient implementation," Journal of Economic Theory, Elsevier, vol. 177(C), pages 659-677.

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    More about this item

    Keywords

    Vickrey auctions; Collusion; Efficiency;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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